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KembaraXtra – Legal Terms – Promissory Note
A promissory note is a written and unconditional promise made by one person to another, signed by the maker, undertaking to pay a specified sum of money either on demand or at a fixed or determinable future date. Promissory notes are recognized as negotiable instruments under the Bills of Exchange Act 1882. The maker of the note is the person primarily liable for payment, unlike a bill of exchange where another party may be required to accept liability. The promise must be clear, unconditional, and directed toward payment of money only. Promissory notes are commonly used in commercial transactions, loans, and banking arrangements. A bank note itself is a type of promissory note payable to the bearer on demand.
Because promissory notes are negotiable instruments, they may generally be transferred from one person to another through endorsement or delivery. The holder of the note may enforce payment according to its terms. Many legal rules applicable to bills of exchange also apply to promissory notes with necessary modifications. Unlike bills of exchange, promissory notes do not require acceptance because the maker already undertakes direct liability. Failure to honour a promissory note may result in civil proceedings for recovery of the debt. Promissory notes therefore play an important role in finance, commercial law, and credit transactions.
A promissory note is a written and unconditional promise made by one person to another, signed by the maker, undertaking to pay a specified sum of money either on demand or at a fixed or determinable future date. Promissory notes are recognized as negotiable instruments under the Bills of Exchange Act 1882. The maker of the note is the person primarily liable for payment, unlike a bill of exchange where another party may be required to accept liability. The promise must be clear, unconditional, and directed toward payment of money only. Promissory notes are commonly used in commercial transactions, loans, and banking arrangements. A bank note itself is a type of promissory note payable to the bearer on demand.
Because promissory notes are negotiable instruments, they may generally be transferred from one person to another through endorsement or delivery. The holder of the note may enforce payment according to its terms. Many legal rules applicable to bills of exchange also apply to promissory notes with necessary modifications. Unlike bills of exchange, promissory notes do not require acceptance because the maker already undertakes direct liability. Failure to honour a promissory note may result in civil proceedings for recovery of the debt. Promissory notes therefore play an important role in finance, commercial law, and credit transactions.
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